FISCAL NOTE
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to provide low-income workers with a refundable state tax credit based on the federal earned income tax credits. Current law provides for a nonrefundable tax credit.
As written, the bill title indicates the proposal is to “authorize a refundable credit based upon federal poverty guidelines.” However, the proposed change creating the credit indicates the credit is to be equal to ten percent of the earned income credit allowed under Section 32 of the federal Internal Revenue Code. Additionally, the proposal rewrites W. Va. Code §11-21-22 to create a refundable tax credit to be known as the “Working Families Tax Credit.” Since the proposed change to W. Va. Code §11-21-22 does not follow the standard convention of strikethrough for language to be replaced and underlining for new language, it is uncertain how changes to W. Va. Code §11-21-22, as in the proposed bill, affect the current nonrefundable tax credit known as the “Low-Income Family Tax Credit.”
Assuming that the proposed “Working Families Tax Credit” would be used in conjunction with the current “Low-Income Family Tax Credit,” it is estimated that passage age of this bill would reduce revenues by roughly $31.8 million in FY2011 and by roughly $29.6 million per year thereafter. The larger reduction in FY2011 is attributable to the temporary increase in the federal Earned Income Tax Credit for tax years 2009 and 2010 resulting from passage of the American Recovery and Reinvestment Act of 2009.
There would be no additional administrative costs to the State Tax Department associated with passage of this bill.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2010
Increase/Decrease
(use"-") |
2011
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-31,800,000 |
-29,600,000 |
Explanation of above estimates (including long-range effect):
As written, this bill would create the “Working Families Tax Credit.” The credit would be equal to ten percent of the earned income credit allowed under Section 32 of the federal Internal Revenue Code.
Assuming that the proposed “Working Families Tax Credit” would be used in conjunction with the current “Low-Income Family Tax Credit,” it is estimated that passage age of this bill would reduce revenues by roughly $31.8 million in FY2011 and by roughly $29.6 million per year thereafter. The larger reduction in FY2011 is attributable to the temporary increase in the federal Earned Income Tax Credit for tax years 2009 and 2010 resulting from passage of the American Recovery and Reinvestment Act of 2009.
There would be no additional administrative costs to the State Tax Department associated with passage of this bill.
Memorandum
The stated purpose of this bill is to provide low-income workers with a refundable state tax credit based on the federal earned income tax credits. Current law provides for a nonrefundable tax credit.
As written, the bill title indicates the proposal is to “authorize a refundable credit based upon federal poverty guidelines.” However, the proposed change creating the credit indicates the credit is to be equal to ten percent of the earned income credit allowed under Section 32 of the federal Internal Revenue Code. Additionally, the proposal rewrites W. Va. Code §11-21-22 to create a refundable tax credit to be known as the “Working Families Tax Credit.” Since the proposed change to W. Va. Code §11-21-22 does not follow the standard convention of strikethrough for language to be replaced and underlining for new language, it is uncertain how changes to W. Va. Code §11-21-22, as in the proposed bill, affect the current nonrefundable tax credit known as the “Low-Income Family Tax Credit.”
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov